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Industrial Development & Economic Growth in Punjab

Last updated on Aug, 31 2021

Economic Snapshot
Per capita Income


Punjab, one of the northernmost states of India, is bordered by the Pakistani province of Punjab to its west, Jammu & Kashmir in the north, Himachal Pradesh in the northeast, Haryana in the south and southeast, and Rajasthan in the southwest.

The confluence of five rivers makes Punjab’s agricultural land rich and productive. Approximately, 82% of the state’s land is under cultivation compared with the national average of 40%.

The state’s GSDP (in Rs.) increased at a compound annual growth rate (CAGR) of 6.78% between 2015-16 and 2020-21.

The state provides investment opportunities in sectors such as textiles, agro-based industries, IT & ITeS, automotive and auto components, sports goods, and light engineering goods.

Punjab is the source of 95% of India’s woollen knitwear production, 85% of India’s sewing machine production, and 75% of India’s sports goods production.

Punjab is known as the ‘Breadbasket of India’ and also led to first Green Revolution in the country. By 2025, it is expected that the state will be among the leading producers of non-food grains as well as exporter of various agri-products. Punjab alone contributes to 19% (wheat), 11% (rice), 5% (cotton), 10% (milk), 20% (honey) and 48% (mushrooms) grown in the country.

Punjab’s road, rail and air transport network, connectivity, construction of bridges and infrastructure facilities are rated among the best. As of April 2021, Punjab had a total installed power generation capacity of 14,388.69 MW, of which 4,214.54 MW was under the central sector, 3,281.20 MW (state utilities) and 6,892.95 MW (private sector). Of the total installed power-generation capacity, 8,765.51 MW was contributed by thermal power, 3,809.12 MW by hydropower and 1,617.25 MW by renewable energy.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), cumulative FDI inflow in the state stood at US$ 741.23 million between October 2019 and March 2021.

Under the State Budget 2021-22, Rs. 2,449 crore (US$ 337.46 million) has been allocated for roads and bridges, of which funds worth Rs. 575 crore (US$ 79.23 million) were allocated to upgrade, construct and repair 560 kms of roads and bridges in FY22. Total funds worth Rs. 160 crore (US$ 22.05 million) were proposed for improvement of 124 rural roads. A total of Rs. 250 crore (US$ 34.45 million) has been set aside, under the Central Road Fund (CRF) scheme, for various works on 308 kms of road.

Under the State Budget 2021-22, Rs. 1,600 crore (US$ 220.47 million), Rs. 1,400 crore (US$ 192.91 million) and Rs. 114 crore (US$ 15.71 million) have been allocated for Smart Cities, AMRUT and Swachh Bharat Mission (Urban), respectively.

In March 2021, Union Education Minister Mr. Ramesh Pokhriyal ‘Nishank’ announced opening of a new Kendriya Vidyalaya in Punjab.

Punjab has easy procedures to set up a business according to a study by the World Bank and KPMG. Punjab had set up a Bureau of Investment Promotion (BIP) in December 2013 for one-stop clearance of investment proposals. BIP has powers to give approvals related to pollution control, excise and taxation, labour issues, factory licences, boiler registrations, town and country planning, land and power-related issues.

Punjab has emerged as a key hub for textile-based industries including yarn, readymade garments and hosiery. With the development of apparel parks, favourable textile policy and other incentives for the creation of textile infrastructure, the state offers opportunities for investment.

Total merchandise exports from Punjab stood at US$ 5.61 billion in FY20 and US$ 5.29 billion in FY21.  

Key Sectors:

  • In 2019-20, the total production of horticulture crops in the state was expected to be 413.30 thousand metric tonnes and area under production was 7,797.65 thousand hectares. In 2019-20, the total production of vegetables and fruits was estimated at 5,537.82 thousand metric tonnes and 2,106.12 thousand metric tonnes, respectively.
    • In the state, Basmati rice is the most exported commodity and exports reached US$ 535.77 million in between April 2020 and January 2021.
  • Three mega food parks and one food park in Punjab was notified by the Ministry of Food Processing Industries, out of which, one mega food park is already operational and second one started partial operation since April 2019.
  • Punjab’s IT policy and the incentives offered to the IT industry are aimed at promoting Punjab as an attractive destination for the industry. Mohali has been developed as an IT and ITeS hub in the state.
  • Punjab is among the largest producers of cotton and blended yarn as well as mill-made fabrics in India. Ludhiana is often referred to as the ‘Manchester of India. In FY21 (until January 2021), Punjab exported cotton yarn worth US$ 323.66 million and ready-made garments (man-made fibres) worth US$ 123.55 million.
Punjab State Presentation

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Punjab Map